Bitcoin, or a “Peer-to-Peer Electronic Cash System” according to its alleged creator, Satoshi Nakamoto, is a digital asset that features decentralization, increased levels of anonymity and security, and is claimed to be untraceable. There is no convincing evidence so far proving whether Satoshi is a real or a fictional character or a group of character using an alias.
The concept was introduced by Satoshi Nakamoto on January 10, 2009. Although there is currently a number of questions concerning Bitcoin’s price fluctuations and aspects of it's regulation, it is widely adopted around the world and becoming rapidly more popular in (but not limited to) the fintech industries.
The term usually used to describe Bitcoin along with a number of other electronic cash systems is “cryptocurrency”, from Greek “kryptos”, meaning “secret” and Latin “currens”, meaning “flowing”, or, in a wider sense, a medium of exchange that is present and known.
Bitcoin, in turn, takes its name from the concept of Bit Gold introduced by Nick Szabo in 2005, and since it featured coins it was aptly named Bitcoin.
Wladimir van der Laan is the Lead Maintainer, and Bitcoin Core, which is a community of more than a 100 developers from all over the world, is probably the most notable contributor.
The Lightning Network is one example of a relatively minor fraction, but technically, individual developers, technicians, and the community of users all work collectively on the changes to be implemented.
Mining is a process that enables users to create new blocks in the blockchain using user PC nodes.
The users (miners) employ their computers’ calculating powers to perform complex mathematical operations and build new, sound and safe blocks that will be able to become part of a healthy system. Mining pools involve many users who unite and do the work together and share the profits.
There are numerous types of nodes, including master nodes, super nodes, and light nodes, which store only a part of the information about the network and known to be potentially vulnerable to misinformation because they rely on full nodes (who store all network data) for data verification.
With financial systems that preceded it, there were fees, long transaction times, plenty of paperwork, and the fact that a third party, and, later, a number of third parties, could track and inspect and even seize financial assets. There were questions regarding safe transportation and usage of funds by third parties.
Bitcoin not only dealt with the red tape and offered state-of-the-art security. It featured no single point of control over the structure, redistributing control over the network evenly between individual computers of the users who made decisions collectively.
It became immediately obvious Bitcoin offered superior capabilities, which soon made it very popular, although hacker attacks were still possible and happening.
Bitcoin’s price has experienced major ups and downs in the past few years, the most notable taking place in December 2017 when Bitcoin was worth $20 000, after which it fell suddenly, losing 70% in value over the course of the beginning of the year. Check the current Bitcoin price here.
While there are many speculations on the future price of Bitcoin, the questions of transaction malleability, liquidity, volatility, and reliability in general still remain a problem for the trade industry and a concern for fintech enthusiasts.
Security and Anonymity
Besides from decentralization, Bitcoin offers a row of security mechanisms. SHA-256 hash created by the National Security Agency, elliptic curve cryptography, private and public keys, digital signatures, under-the-radar, multisignature and “cold” wallets, along with subdermal wallets and Xapo, a secret military vault inside a granite mountain, are only a few measures Bitcoin uses to secure the assets of the clients.
As Bitcoin’s code is still a work in progress, upgrades and updates are constantly being implemented. Hard forks are what happens when new rules are introduced which part of the network does not agree with. This usually means that two versions of the code emerge, and two communities (i.e. Bitcoin Cash and Ethereum Classic). While hard forks by definition are mutually exclusive, soft forks feature backward compatibility (but can still disintegrate due to hash rate problems or turn into a hard fork).
Forks are necessary to ensure code’s evolution and competitive ability.
Per se Bitcoin’s smallest fraction is Satoshi, which is a 100 000 000th of Bitcoin, although there are millisatoshis (100 000 000 000th of a Bitcoin) used to make small transactions readable and speed up Bitcoin transactions in general.